World oil reached a new record price near 121 dollars a barrel on Tuesday as concerns over the United States economy eased, analysts said.
New York's main oil futures contract, light sweet crude for June delivery, reached an all-time high of 120.93 dollars a barrel during Asian hours before dropping back in late afternoon trade when it was three cents lower at 119.94 dollars a barrel.
The contract crashed through the symbolic 120-dollar ceiling for the first time on Monday and closed at a record 119.97 dollars on the New York Mercantile Exchange.
Brent North Sea crude for June delivery was 24 cents higher at 118.23 dollars a barrel, after settling at a record 117.99 dollars on Monday in London. The contract had earlier hit an intra-day high of 118.58 dollars.
Oil futures prices on both sides of the Atlantic have nearly doubled in a year and have continued to soar since the benchmark New York contract broke through 100 dollars at the start of 2008.
Latest US economic data have given oil prices a fresh boost, said Victor Shum, senior principal at Purvin and Gertz energy consultancy in Singapore.
On Monday, the Institute of Supply Management said its index for the vast US service sector rose to 52 percent in April, above the level of 50 that means expansion, and better than expected by private analysts.
That report followed official data on Friday which showed that the US economy shed 20,000 jobs in April, far fewer than the 75,000 expected by the market.
The unemployment rate unexpectedly slipped a tenth of a percentage point to 5.0 percent, the US Labor Department said, compared with an expected rise to 5.2 percent.
Shum said the jobs report gave momentum to the market and the numbers from the services sector "further added to the thinking that the slowdown in the US economy may not be as bad as initially thought."
Traders had feared that a severe slowdown in the United States, the world's biggest economy and largest energy consumer, could affect oil demand.
"The sentiment is quite bullish as a lot of investors think that either way you can't go wrong with oil," Shum said.
Dave Ernsberger, Asia director of global energy information provider Platts in Singapore, said that "most importantly now there is evidence that the US economy is doing quite well."
Supply jitters from Nigeria and geopolitical tension over Iran added to the price surge on Monday, analysts said.
Nigerian militants attacked an oil ship off the coast of the west African country and took two people hostage, a military spokesman said Sunday. Shell accounts for about one-half of Nigeria's 2.1 million barrels-per-day output.
"Nigeria is the lingering hotspot the markets will be focusing on," said MF Global analyst Ed Meir.
Iran said Monday it would reject any offer that violates its right to the full nuclear fuel cycle after world powers said they had prepared a new package to end a long-running standoff over its nuclear programme.
Oil players fear the ongoing tension could result in Iran using oil as a bargaining chip. Iran is the second-largest producer in the Organisation of the Petroleum Exporting Countries (OPEC) cartel.
US President George W. Bush will make US concerns about soaring oil prices "very clear" when he visits Saudi Arabia next week, White House spokesman Scott Stanzel said Monday.
Saudi Arabia is OPEC's biggest crude producer.